What is Dynamic Pricing, and Why Do Consumers Need Better Protections?

In this blog post, author Darrell M. West (CTI/TechTank) shares how his experience bargaining in Istanbul’s bazaars mirrors today’s online shopping environment, where consumers often face a similar imbalance of information. While e-commerce offers convenience and choice, it also creates a one-sided dynamic in which sellers—armed with extensive data—can anticipate and influence buyer behavior far more effectively than consumers can assess pricing fairness.

He explains that this imbalance is driven by dynamic pricing, where companies use AI and data analytics to adjust prices in real time based on demand, user behavior, and individual preferences. Unlike traditional retail, where prices are generally fixed and transparent, online marketplaces can change prices minute-by-minute. The rise of agentic AI further intensifies this, enabling firms to tailor prices at the individual level using detailed behavioral data, significantly increasing seller power.

Despite these concerns, West notes that dynamic pricing can benefit consumers in certain cases, such as when lower demand leads to reduced prices or when shoppers gain access to a broader range of products online. However, these advantages are offset by substantial risks, including information asymmetry, surge pricing, and “personalized” or “surveillance” pricing—where individuals may be charged more based on their perceived willingness or ability to pay.

To address these challenges, the author advocates for stronger regulatory oversight and greater transparency from companies on how prices are set. He highlights policy efforts such as the Digital Services Act in the EU and emerging U.S. state laws aimed at limiting predatory pricing practices and requiring disclosure when algorithms influence prices. Together, these measures seek to rebalance the digital marketplace and ensure fairer outcomes for consumers…

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